The financial and budgetary tasks in the first 6 months of 2020 were implemented in the context of greatly fluctuating international and domestic circumstances. Due to the impact of the Covid-19 pandemic, we still maintained large balances of the economy, contributing to macroeconomic stability, maintaining the 6-month growth at +1.81%, social security was guaranteed, social order and safety were kept stable. Viet Nam was also one of the few countries to maintain the national credit rating, while over 90 countries’ credit ratings were lowered or adjusted. This can be regarded as an outstanding and remarkable success.
Regarding the performance of financial and budgetary tasks in the first 6 months and implementation plan for the last 6 months of 2020
I. THE PERFORMANCE OF FINANCIAL AND BUDGETARY TASKS IN THE FIRST 6 MONTHS OF 2020
The financial and budgetary tasks in the first 6 months of 2020 were implemented in the context of greatly fluctuating international and domestic circumstances. Due to the impact of the Covid-19 pandemic, the world economy quickly fell into a recession; Vietnam's major partners were seriously affected; Large economies and many countries in the ASEAN region were forecasted to experience sharply negative growth.
In this context, we still maintained large balances of the economy, contributing to macroeconomic stability, maintaining the 6-month growth at +1.81%, social security was guaranteed, social order and safety were kept stable. Viet Nam was also one of the few countries to maintain the national credit rating, while over 90 countries’ credit ratings were lowered or adjusted. This can be regarded as an outstanding and remarkable success.
Under the impact of the Covid-19 pandemic, grasping the Prime Minister’s guidance (which was to carry out the "dual task" - both to prevent the pandemic and to ensure socio-economic developments and the quality of people’s lives) and getting ready for the post-pandemic recovery and development stage, the Ministry of Finance proactively proposed fiscal solutions to respond to the Covid-19 pandemic, removing difficulties for production and business activities, ensuring social security.
Regarding the State budget revenues, the Ministry of Finance proposed exemption of import tax on medical supplies and equipment to prevent and control Covid-19, on materials and input materials of a number of industries affected by the pandemic; extended the deadline for payment of value added taxes, corporate income taxes, personal income taxes and land rents to businesses and households conducting business; increased the family deduction threshold for personal income taxes; reduced 30% of environmental protection tax for aviation fuels; reduced 30% of the payable corporate income taxes in 2020 for enterprises, cooperatives, non-business units and other organizations with taxable turnovers not exceeding VND 200 billion; increased the family deduction threshold of personal income taxes for taxpayers, continued to exempt agricultural land use taxes until the end of 2025; reduced 50% of registration fees for domestically manufactured or assembled cars; coordinated with ministries and sectors in reducing many fees and charges for enterprises and ordinary people.
Regarding State budget expenditures, the Ministry of Finance proactively coordinated with a number of related ministries and agencies to issue a number of specific regimes for people directly involved in pandemic prevention and control and those who were quarantined; coordinated in developing supportive policies for businesses and people greatly affected by the Covid-19 pandemic; developed mechanisms to ensure funding and to allocate central budget resources for implementation.
However, as Viet Nam economy is deeply integrated and greatly open while having limited autonomy and resilience, despite early control of the pandemic in the country, the impact of the pandemic on the Viet Nam’s economy was quite severe. Domestic production and business activities encountered many difficulties, exports and domestic consumption were all low, crude oil prices plunged and the implementation of fiscal measures to prevent diseases, support businesses and people greatly affected the balance of state budget revenues and expenditures and the implementation of financial tasks in the first 6 months of 2020, specifically as follows:
1. Actively administering fiscal policies, ensuring the state budget balance:
a) Total state budget revenues in 6 months were estimated at 44.2% of the plan, down 10.5% compared to the same period in 2019; If the revenue from equitization reached the estimated progress, plus the tax amount whose payment periods had been extended, total revenues would reach over 48% of the plan.
This is the year with the lowest budget revenue collection progress since 2013, of which: domestic revenue reached 44.1% of the plan, down 7.1%; revenues from crude oil reached 59.7% of the plan, down 28.7%; Balanced revenues from imports and exports reached 43.1% of the plan, down 22.3% compared to the same period of 2019.
As regards domestic revenues, revenues from 3 economic sectors were low. Specifically, revenues from SOEs reached 37.1% of the plan, down 21.5%; revenues from FDI enterprises were 41.9% of the plan, down 6.3%; revenues from non-state-owned economic sector reached 37.1% of the plan, down 15%. This result reflects the current state of the economy, showing that the business activities of enterprises really encountered many difficulties.
The whole country has 34/63 localities collecting 6-month revenues greater than 50% of the plan; if land use charges and lotteries were excluded, only 14/63 localities would collect revenues greater than 50% of the plan; 30/63 localities had collection progresses which were below 45% of the plan.
Of the 16 key localities with with large contributions to State budget revenues, only 5/16 reached the domestic collection progress of over 50% (Quang Ninh, Bac Ninh, Dong Nai, Binh Duong and Ba Ria Vung Tau); The remaining 11 localities’ progresses were less than 50%, of which 8 localities achieved less than 40% of the plan.
By the end of June, the Tax agency had received and handled 149 thousand requests for extension of payment of taxes and land rents of businesses, households and individuals doing business in a timely and lawful manner; The total tax amount whose payment periods were extended was about VND 43 trillion, lower than the forecast (about VND 180 trillion). The difference was due to the fact that when calculating the impact based on the implementation situation in the last months of 2019, the authorities could not take into account nor forecast the serious difficulties that actually happened to the economy in the first 6 months of 2020.
b) Total state budget expenditures as of the end of June were estimated at 41.8% of the plan, of which: expenditure on investment for development reached 33.1% of the plan, interest payment reached 50.3% of the plan, recurrent expenditures reached 48.2% of the plan. In general, the management of state budget expenditures was proactive, ensuring strict conformity to policies and regimes.
Up until now, the State budget has spent about VND 15.3 trillion on prevention and control of Covid-19 pandemic and on financial support for people in difficulties due to the pandemic, of which: spending on prevention and control was VND 4.1 trillion; expenditures on financial support for more than 11 million people affected by Covid-19 epidemic under the Government's Resolution No. 42/NQ-CP were about VND 11.3 trillion.
The central budget also spent VND 1,664 billion sourced from the national reserves in 2020 to help localities to prevent African Swine Fever (ASF), to overcome the adverse consequences and to restore production after natural disasters (droughts, saltwater intrusion ...). Besides, 13.6 thousand tons of rice (from state reserves) was provided to localities to aid in overcoming the consequences of natural disasters, distributing alms and providing famine relief for people in the between-harvests season at the beginning of 2020.
Regarding the disbursement of capital for development investment, disbursement progress in the first 6 months reached 33.1% of the plan (of which: Central budget reached 28.6%; local budgets reached 30.7%), which was better than the same period of 2019 (reaching 28.56%). However, in comparison with the total public investment capital allowed to be disbursed in 2020 (including sources transferred from previous years), the figure is only approximately 29% of the plan; disbursement of foreign capital only reached 10.2% of the plan in 2020.
Regarding implementation activities, the Ministry of Finance proactively reviewed and amended the control mechanism of payment of investment capital, by moving from pre-inspection to post-inspection, shortening the control time from 7 days to a maximum of 4 days. streamlining procedures, promoting the disbursement of capital; organized online conferences with ministries and localities to review the disbursement of ODA and foreign concessional loans in the first 6 months; periodically reported to the Prime Minister regarding the situation and proposed solutions to promote the disbursement of public investment capital in 2020.
In order to reduce the negative impact of the Covid-19 pandemic, to share difficulties with businesses and people, the Ministry of Finance reported to the Government and the National Assembly to request ministries, central and local agencies to actively manage the state budget expenditures in a thorough and economical manner and to perform important spending tasks in accordance with the assigned budget; reviewed and further reduced at least 70% of expenditures on organizing conferences and domestic traveling, and saved the remaining 10% of budget for recurrent expenditures in 2020; especially the budget for unnecessary procurement; At the same time, the Ministry of Finance did not adjust the base salary for cadres, civil servants, officials, armed forces and pensions (the adjustment was previously scheduled to happen on 1 July 2020).
c) Balance of the central budget and local budgets in the first 6 months was guaranteed. The Ministry of Finance actively issued VND 96.1 trillion of Government bonds, with an average term of 14.01 years, an average interest rate of 2.99%/year, lower than those of foreign concessional loans, ensuring resources to accommodate the spending tasks. At the same time, the Ministry of Finance negotiated a number of low-cost loans from international organizations to reduce the domestic borrowing pressure. The debt repayment was executed in a proper and timely manner, in accordance with commitments, contributing to strengthening the national credit rating.
2. Formulating and improving institutional frameworks:
The Ministry of Finance proactively performed the task of formulating and improving the institutional frameworks to meet the progress/quality requirements, contributing to the institutionalization of the Party’s and State's mandates and visions, improving the effectiveness and efficiency of state management in financial and budgetary matters, promptly removing difficulties for businesses and people affected by the Covid-19 pandemic.
In the first 6 months of the year, the Ministry of Finance submitted 03 Resolutions to the Government for further submission to the National Assembly for approval at the 9th session of the XIV National Assembly; submitted 05 Resolutions to the National Assembly‘s Standing Committee for consideration, 02 resolutions of which were passed; submitted 12 Decrees to the Government for promulgation, submitted 02 Decisions to the Prime Minister for promulgation; At the same time, the Ministry of Finance issued under its authority 63 circulars on financial and budgetary management, focusing on tax mechanisms and policies, reducing fees and charges in support of production and business, strictly and effectively managing state budget spending, financial market development, accounting services, insurance, cash management of the state.
3. Price management and financial markets:
a) The Ministry of Finance coordinated with ministries, sectors and localities to ensure the compliance with the laws and regulations on prices (especially supplies and equipment for the prevention of Covid-19...), to promptly detect and strictly handle violations; the Ministry of Finance also recommended localities to strengthen price management, stabilize the market in their areas. This contributed to the decrease in the consumer price index (CPI) in the second quarter of 2020 (down by 1.87% compared to the previous quarter); the average 6-month CPI increased by 4,19% compared to the same period of 2019.
b) Regarding the securities market, besides continuing to review and improve the institutional frameworks: the Ministry of Finance promptly implemented solutions to support the market, such as: reducing and eliminating fees for some securities services; reducing processing time for enterprises' treasury stock purchase dossiers from 7 days to 24 hours; continuing to restructure securities companies, fund management companies..., strengthening inspection and supervision, ensuring the healthy and stable development of the market. By the end of June, the VN-INDEX decreased by 14.1%, the market size decreased by 11.2% compared to the end of 2019.
In the context of the global securities market fluctuations due to the impact of the Covid-19 pandemic and increasing tensions, geopolitical conflicts, Vietnam's securities market was also affected. However, the volatility was not great, not creating massive capital withdrawals of foreign investors; the market soon stabilized and recovered as soon as the pandemic was under control in the country, proving investors' confidence in the long-term prospects of Viet Nam's economy.
c) Regarding insurance markets: The Ministry of Finance submitted to the Government a draft decree replacing compulsory insurance for civil liability of motor vehicle owners; continue researching and drafting the (amended) Law on Insurance Business. In the first 6 months, total premium revenues increased by 16.3%; total asset values of insurance businesses increased by 20.2%; Re-investment by enterprises in the economy increased by 19.2% compared to the same period in 2019.
4. Administrative reform, rearrangement of organizational structure:
In the first 6 months, the Ministry of Finance has implemented 103/180 administrative reform tasks/activities in 2020; reviewed and annulled 28 administrative procedures, amended and supplemented 35 procedures and issued 30 new procedures in the fields of tax, customs, treasury, public assets, accounting, auditing; publicly implemented and timely updated to the National Database of administrative procedures as prescribed; studied and proposed the amendment and supplement to 129 regular reporting regimes; enhanced the application of information technology in making reports; continued to reduce and simplify business conditions under the management scope.
In the construction of e-government, the Ministry of Finance has operated and connected the document management software (eDocTC) to send and receive documents via the National Document Connecting Shaft with 95 agencies and units.
By the end of June 2020, the total number of administrative procedures under the management of the Ministry of Finance was 951, in which online public services at level 3 and level 4 were provided for 560 procedures (reaching the rate of 59%). The number of level-4 online public services implemented is 351 procedures, reaching the rate of 37%, exceeding 30% of the target set by the Government's Resolution 17/NQ-CP in 2019 on developing e-government. It is expected that by the end of 2020, the number of online public services at level 3 and level 4 on the Ministry of Finance's public service portal will be increased from 560 to 634 (reaching the rate of 67%).
There were 99.6% of businesses participating in electronic tax return; 99.1% of businesses registering to pay electronic taxes; 96.8% of records refunded electronically. The Ministry of Finance implemented electronic customs procedures at all customs units; 13/14 ministries and sectors participated in connecting the national one-stop mechanism with 198 administrative procedures.
Implementing the policy of rearranging the streamlined apparatus, reducing the focal points, and improving the operational efficiency under Resolution 18 and 19 of the 6th Central Conference (Session XII), in the first 6 months, the Ministry of Finance has cut 89 focal points at department-level of the tax authority; disbanded 06 state treasuries at district-level. Generally, from 2018 up to now, the Ministry of Finance has reviewed, arranged and cut down 2,985 administrative focal points; reduced 2,044 officials in leadership positions at the team/group level or higher; reduced 09 public non-business units (from 36 to 27 units). The process of organizing the apparatus and cutting down the focal points goes promptly, the political tasks are carried out smoothly, without causing congestion and obstruction.
5. The management of using public properties; the inspection and examination of the finance-budget:
The Ministry of Finance has coordinated with ministries, sectors and localities to review and determine the number of cars according to titles of leaders, shared cars and special-use cars according to regulations; coordinated in rearranging and handling houses and lands of agencies and units under the central management. In general, the management and procurement of public assets in ministries, sectors and localities has continued to have positive changes, ensured tightness and thriftiness.
Regarding the inspection and examination of finance-budget, in the first 6 months, the Ministry of Finance has focused on the fields of management of budget revenue and expenditure, management and use of investment capital, management of price and securities; checked nearly 259 thousand enterprises' tax declaration dossiers; proposed to handle over VND 29.3 trillion, of which VND 12 trillion is collected and paid to the budget; reduced losses, reduced deductions and handled other financial matters of VND 17 trillion.
6. Regarding to international cooperation and external finance:
The Ministry of Finance has continued to implement commitments of cutting special preferential import tax within the framework of 15 Free Trade Agreements (FTA); actively participated in negotiating new FTAs. The Ministry of Finance has prepared tasks as ASEAN Chairmen; participated in financial cooperation activities within the framework of ASEAN, ASEAN + 3, APEC, G20, OECD, international forums organized by the United Nations, the World Bank, and the World Monetary Fund; updated the reviews and recommendations of international financial institutions on macroeconomic situation; adjusted fiscal policies to cope with the impact of the Covid-19 pandemic.
In general, in the context of extremely difficult circumstances, the Finance sector has determined and focused on fully and synchronously implementing the proposed finance-state budget solutions; administered budget revenues and expenditures to actively cope with epidemics; strictly controlled the state budget deficit and public debt; made an important contribution to maintain macroeconomic stability and ensured major balances of the economy, social security, social order and safety, and created conditions for good performance "dual duty"- both to prevent epidemic and to develop social-economic, ensure people's life.
II. PLANNING ON IMPLEMENTATION OF FINANCE-STATE BUDGET TASKS IN THE LAST 06 MONTHS OF 2020
Currently, the epidemic situation inside the country has been basically controlled, but the disease situation in the region and in the world is still complicated and unpredictable. The impacts of the Covid-19 pandemic on the world economy, especially the major economic partners of Vietnam are increasingly serious.
Viet Nam was one of the first countries controlled the epidemic situation. That has brought the operations of many businesses and people's lives back to normal, minimized adverse impacts on economic-finance and social order and safety, opened up opportunities to attract and receive capital flows from the region and the world.
For the negative effects of the Covid-19 pandemic on the state budget balance, based on the provisions of the Law on State Budget, and the economic growth scenarios the Government reported to the National Assembly, the Ministry of Finance submitted the scenarios and plans the state budget balances to cope with the impacts of the Covid-19 pandemic to report to the Government and submit to the National Assembly. On that basis, the National Assembly issued Resolution No. 122/2020/QH14 which contains many contents related to the administration of fiscal policy in 2020.
In the remaining months, the situation of the Covid-19 epidemic in the world was still complicated and strongly affecting to Vietnam's economy; Besides, natural disasters and other diseases can also have strong impacts on people's production and life. But with the highest determination, not subjective, the Finance sector shall strive to fulfill at the highest level the task of State budget revenue and expenditure in 2020.
In order to achieve this goal, the Ministry of Finance has proposed 10 groups of solutions, including proposals to ministries, sectors and localities to coordinate and direct the implementation of the following key solutions:
First, the Ministry of Finance shall continue to work on fiscal solutions, including tax and fee solutions, to submit to competent authorities to decide on and create conditions for removing difficulties and promoting production and business.
The Ministry of Finance shall focus on effectively implementing of issued fiscal and monetary solutions; continue to improve the business environment, remove difficulties for businesses and individuals affected by the Covid-19 epidemic, attract and actively receive foreign investment flows, and recover economic growth.
Second, the party committees and local authorities shall direct functional forces in the area to coordinate closely with the Tax and Customs authorities to strengthen the revenue management in accordance with each field, area, and subject; promote anti-revenue losses, transfer pricing, trade frauds and tax evasion; urge the handling of tax arrears collection. At the same time, the competent authorities shall focus on the timely handling of tax rescheduling documents and land rent as prescribed, without causing difficulties and obstacles for businesses and business households.
Third, the Ministry of Finance shall manage state budget expenditures within the scope of assigned estimates; strive to disburse fully public investment of the 2020 plan (including public investment of the 2019 plan transferred to); focus on reviewing, arranging, and integrating spending tasks to reduce recurrent expenditures not really needed.
Localities shall proactively ensure local budgets and use additional central budgets (if any) to implement the promulgated social security policies; avoid arising delayed status, policy debt in the area.
In case of the expected reduction of local state budget revenues compared with the estimates assigned by competent authorities, localities shall take the initiative in formulating plans for administration and use of reserves, sources of increase in budget revenues in 2019 and local resources for expenses for preventing and overcoming consequences of natural disasters and epidemics, prioritizing the implementation of policies and regimes related to people and social security.
In case, after using all the above solutions and resources, the State budget balance is still in difficulty, the Ministry of Finance shall report to the Government for submission to the National Assembly for consideration and decision to adjust the targets on the state budget in 10th session, XIV National Assembly.
Fourth, the equitization and divestment of state capital in enterprises:
The progress is currently very slow according to the plan. In the first 6 months, only 03 enterprises had equitization plans approved by the competent authorities, the number of remaining enterprises shall implement the equitization plans for the last 6 months of 2020 is 92.
The Ministry of Finance shall propose ministries, sectors and localities to focus on implementing equitization according to the plan, expanding methods of selling shares (including selling the whole business), striving to ensure the revenue from shares and state divestment at enterprises as estimated (the central budget is VND 45,000 billion).
Fifth, the formulation of 2021 state budget estimates and 3-year medium-term plan for the period of 2021-2023:
Due to the impacts of the Covid-19 pandemic, a lot of problems arose and had to be reported to the competent authorities for settlement, so the documents on formulating the plans of socio-economic development, state budget estimates in 2021 and 3-year fiscal-state budget in the period of 2021-2023 are later as prescribed. After receiving the guiding documents, the ministries, central agencies, and localities shall urgently direct the implementation of construction, ensure the reality and adherence to the situation, show a positive attitude and a strong determination.
The Ministry of Finance summarized key information about the implementation of financial and budgetary tasks in the first 6 months of 2020, the working agenda of the last 6 months of 2020. The Ministry of Finance requests press agencies to coordinate in public communication and information dissemination./.
MINISTRY OF FINANCE